July 4th, 2025

Stocks, treasuries, gold, oil, and Bitcoin in motion: The jobs and policy effect

At the heart of this storm is the latest US employment report, which has once again defied expectations, alongside the final approval of President Trump’s US$3.4 trillion tax and spending package. These events have sent ripples across asset classes, influencing everything from stock indices and Treasury yields to the US dollar, gold, oil, and even Bitcoin.

I want to share my perspective on their implications and interconnections, while grounding the discussion in the facts and data provided. My aim is to paint a clear picture of the current market landscape, delving into both the opportunities and risks that lie ahead.

The US employment report: Strength with subtle cracks

The US employment report for June has been a focal point for markets, delivering a headline number that suggests continued economic vigour. Nonfarm payrolls, which track the number of jobs added or lost outside the agricultural sector, rose by 147,000, well above the consensus estimate of 106,000. This marks the fourth consecutive month that the labour market has surprised to the upside, reinforcing the narrative of a resilient US economy.

A strong payroll figure typically signals that businesses are confident enough to expand their workforce, a sign of robust demand and economic health. Paired with this, the unemployment rate, a measure of the percentage of the labour force actively seeking work, eased unexpectedly to 4.1 per cent, better than the anticipated 4.3 per cent. This drop suggests a tightening labor market, which could pave the way for wage growth and bolster consumer spending, both critical drivers of economic activity.

However, the report isn’t without its nuances. Beneath these rosy headlines lies a softening in private activity growth, a detail that tempers the optimism. This softening could indicate that, while headline job creation remains strong, specific sectors —perhaps those tied to private investment or discretionary spending —are losing momentum.

From my perspective, this duality in the data is a reminder that economic strength isn’t uniform. The labor market’s resilience is encouraging, but the cracks in private activity suggest that policymakers and investors should remain vigilant. If this softening persists, it could signal broader challenges ahead, especially as the Federal Reserve weighs its next moves on interest rates.

Broader economic indicators: Signs of resilience

Beyond the employment report, other economic indicators suggest that the economy is holding its ground. Initial jobless claims, which count new filings for unemployment benefits, declined in the latest data, as did continuing claims, which track those receiving ongoing support. These reductions imply that job losses are slowing and that unemployed workers are finding new roles more quickly, both positive signs for labor market stability.

Additionally, the ISM Services index, a key gauge of activity in the services sector (which dominates the US economy), returned to expansion territory. A reading above 50 indicates growth, and this rebound suggests that the services sector is shrugging off any prior weakness, contributing to overall economic momentum.

These indicators bolster the case for cautious optimism. The decline in jobless claims aligns with the strong payrolls data, while the ISM Services rebound hints at broad-based resilience. However, I’d caution that these metrics are snapshots, backward-looking by nature, and don’t fully account for future uncertainties, such as the impact of new fiscal policies or global headwinds.

Still, for now, they reinforce the narrative of a US economy that’s weathering challenges better than many had feared.

President Trump’s tax and spending package: A double-edged sword

Shifting to the political arena, President Trump’s US$3.4 trillion tax and spending package has cleared a significant hurdle, passing the House with a razor-thin 218-214 vote. This landmark legislation blends tax cuts with significant spending increases, aiming to juice economic growth while addressing infrastructure and social priorities.

The tax reductions could put more money in the pockets of consumers and businesses, potentially spurring spending and investment. At the same time, the spending component promises to inject capital into the economy, supporting jobs and public projects.

The package’s passage is a double-edged sword. It’s a win for growth-oriented policies, likely contributing to the upbeat mood in equity markets. On the other hand, its hefty price tag raises red flags about the federal deficit, which is already substantial. Critics argue that this could fuel inflation in the long run, forcing the Federal Reserve to tighten monetary policy more aggressively.

The narrow vote margin underscores the contentious nature of this move—it’s a bold bet on growth, but one that hinges on execution and favorable economic conditions aligning. If successful, it could amplify the current economic momentum; if not, it risks exacerbating fiscal imbalances at a time when resilience is already being tested.

Stock markets: Riding the wave of optimism

The stock market has greeted these developments with open arms. The S&P 500 rose by 0.83 per cent, the NASDAQ climbed 0.99 per cent, and the Dow Jones gained 0.81 per cent. These gains reflect a wave of optimism, likely fuelled by the strong jobs data and the fiscal stimulus promised by Trump’s package.

Investors seem to be betting on higher corporate earnings and consumer demand, both of which could flow from these catalysts. However, early trading signals from Asian equity indices and US futures suggest a potential pullback, hinting at profit-taking or lingering doubts about the sustainability of the rally.

The rally is justified given the data, but it comes with risks. Stocks are sensitive to interest rate expectations, and as we’ll see with Treasury yields, the market is pricing in a shift. If rates rise too quickly, or if global risk sentiment sours, these gains could unwind. For now, though, the upward movement reflects a market eager to embrace good news—a classic case of sentiment driving prices, at least in the short term.

Treasury yields: The bear-flattening signal

The US Treasury yield curve offers a more sobering perspective, undergoing a sharp bear flattening. This phenomenon occurs when short-term yields rise faster than long-term ones, narrowing the gap between them. The two-year Treasury yield jumped 9.5 basis points to 3.880 per cent, while the 10-year yield rose 6.9 basis points to 4.346 per cent.

This shift is tied to the strong jobs report, which has recalibrated expectations for Federal Reserve rate cuts. Investors now anticipate a tighter policy stance to curb potential inflation, pushing short-term yields higher as bond prices fall.

A flatter yield curve can signal mixed messages. Historically, an inverted curve (where short-term yields exceed long-term ones) has foreshadowed recessions, but we’re not there yet. Instead, this bear flattening suggests confidence in near-term growth, hence the rise in yields, but tempered expectations for the longer haul.

I view this as a natural market adjustment to the data. It serves as a reminder that borrowing costs are creeping up, which could eventually weigh on growth-sensitive sectors such as housing or corporate investment.

US dollar and gold: A tale of strength and retreat

The US Dollar Index, which tracks the dollar against a basket of major currencies, rose 0.4 per cent after the jobs report. A stronger dollar often follows robust economic data, as it boosts demand for dollar-denominated assets and signals tighter policy ahead. This strength, however, pressured gold, which slid 0.9 per cent to US$3,326 per ounce. Gold thrives in times of uncertainty or low interest rates, but with yields rising and the dollar strengthening, its appeal as a haven is diminishing.

I view the dollar’s recovery as a logical outcome of the data, though its export-dampening effects could pose challenges. Gold’s decline, meanwhile, doesn’t surprise me. It’s a classic reaction to this environment. That said, if geopolitical risks or inflation fears resurface, gold could regain its lustre quickly.

Brent crude: Balancing supply and demand

Brent crude oil slipped 0.4 per cent to US$69 per barrel, even as OPEC+ prepares to add 411,000 barrels per day in August. This drop likely reflects concerns about demand, possibly tied to global growth uncertainties, outweighing the supply increase for now.

The direction of oil prices will hinge on how demand holds up, especially in key markets like China, and whether OPEC+ adheres to its plan. The modest decline suggests a market in wait-and-see mode, which feels prudent given the mixed signals elsewhere.

Bitcoin: Volatility meets technical headwinds

Bitcoin’s journey has been a rollercoaster, rallying to US$110,500 before hitting resistance at US$110,000. Trading above US$109,000, it’s showing stability, but technical analysis reveals bearish divergences across multiple timeframes—15-minute, one-hour, four-hour, and daily charts.

These divergences, where price rises but momentum indicators like the RSI weaken, suggest a fading bullish momentum and a possible pullback to US$106,000-US$107,500. Despite this, long-term trends remain bullish, buoyed by US$603 million in net inflows into US spot Bitcoin ETFs, with Fidelity’s FBTC leading at US$237.13 million.

Bitcoin is cautiously mixed. The ETF inflows signal strong institutional interest, a bullish undercurrent. Yet, the technical warnings can’t be ignored. US$110,000 feels like a psychological ceiling that needs more conviction to break. Traders betting on US$112,000 might be right eventually, but the selling pressure suggests traps in the near term. I’d watch those support levels closely.

Wrapping up

The global financial markets are at a fascinating juncture. The US economy’s resilience, underscored by jobs data and fiscal policy, is driving risk sentiment forward, yet subtle cracks and technical signals urge caution.

Stocks and the dollar are riding high, but yields, gold, oil, and Bitcoin reflect a more complex reality. In my view, the interplay of these factors points to opportunity tempered by vigilance. Growth is here, but its sustainability depends on how these pieces evolve. For investors, staying informed and nimble will be key in navigating what’s next.

Source: https://e27.co/stocks-treasuries-gold-oil-and-bitcoin-in-motion-the-jobs-and-policy-effect-20250704/

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

j j j

February 21st, 2025

Wall Street’s volatility spills into crypto: TradFi’s domino effect

The recent retreat in global risk sentiment, sparked by a cascade of events that began with a disappointing outlook from retail titan Walmart. This development, coupled with a slew of economic data and policy commentary, has painted a multifaceted picture of where markets might be headed.

Let me walk you through what’s happening, why it matters, and what it could mean for investors, consumers, and the broader economic landscape.

The news broke earlier this week when Walmart, a bellwether for the US consumer economy, issued guidance that fell short of Wall Street’s expectations. The retail giant projected net sales growth of just three per cent for the current year, a figure that rattled investors who had grown accustomed to more robust forecasts from the world’s largest retailer. Walmart cited an “uncertain geopolitical landscape” as a key factor, pointing to ongoing tariff jitters and broader economic headwinds.

Shares of the company dropped over six per cent in response, dragging down the Dow Jones Industrials and sending ripples through the Consumer Discretionary sector, which shed 1.2 per cent according to the MSCI US index. Financials weren’t spared either, declining 1.6 per cent, as the broader MSCI US index slipped 0.4 per cent. This wasn’t just a Walmart story—it was a signal that investors were starting to question the resilience of the US consumer and the economy at large.

Adding fuel to these concerns, the latest US jobless claims data didn’t offer much reassurance. Both initial and continuing claims rose week-over-week, coming in slightly above what analysts had anticipated. While the uptick was modest—described by some economists as “trivial” or “just noise”—it nonetheless chipped away at the narrative of a rock-solid labor market.

For months, the US economy has been buoyed by a tight jobs picture, with unemployment hovering near historic lows. But even small cracks in that foundation can amplify worries, especially when paired with Walmart’s cautious outlook. After all, if the labor market starts to wobble, consumer spending—the engine of the US economy—could follow suit, hitting retailers like Walmart hardest.

Meanwhile, the Federal Reserve’s voice has added another layer of nuance to this unfolding story. St. Louis Fed President Raphael Musalem weighed in with a sobering take, arguing that monetary policy should remain “modestly restrictive” until inflation is firmly on track to hit the central bank’s two per cent target. Despite recent data showing inflation cooling somewhat and the labor market holding steady, Musalem isn’t convinced the battle is won.

He warned that the risks of inflation stalling above two per cent—or even climbing higher—are “skewed to the upside.” This hawkish stance suggests the Fed isn’t ready to pivot to rate cuts anytime soon, a prospect that’s kept markets on edge. Investors had been hoping for a more dovish signal, especially after a string of solid economic reports, but Musalem’s comments underscore the Fed’s laser focus on price stability, even if it means squeezing the economy a bit longer.

The bond market reflected this tension. The yield on the 10-year US Treasury note slipped 3 basis points overnight to 4.50 per cent, a subtle but telling move. Over the past week, yields have declined in four out of five sessions, pulling back from the upper end of their recent range.

This shift hints at a market that’s recalibrating—moving away from fears of runaway inflation and toward a more neutral outlook. With tariff details still murky and the US data calendar looking light until the January PCE inflation report drops on February 28, yields might stay anchored around 4.50 per cent for now. That stability could offer a breather for equity markets, but it’s hardly a green light for a sustained rally.

On the currency front, the Japanese yen stole the spotlight, surging to its strongest level against the dollar since December. Speculation is rife that the Bank of Japan (BOJ) might hike rates sooner than expected, a move that would mark a significant shift from its long-standing ultra-loose policy.

The yen’s strength weighed on the US Dollar Index, which slid 0.8 per cent to 106.4. Gold, meanwhile, edged up 0.2per cent, inching closer to the US$3,000 mark as safe-haven demand ticked higher amid the uncertainty. Brent crude also nudged up 0.5 per cent to US$77 per barrel, buoyed by a mix of supply concerns and cautious optimism about global demand. Asian equity indices, however, were a mixed bag in early trading, reflecting the uneven sentiment rippling across markets.

Now, let’s pivot to an intriguing subplot in the financial world: the SEC’s approval of a yield-bearing stablecoin from Figure Certificate Co., dubbed YLDs. Unlike traditional stablecoins like Tether’s USDT, which generate billions in reserve income for issuers but offer no yield to holders, YLDs promise to share the wealth. By investing reserves in US Treasuries and commercial paper, Figure aims to deliver returns to investors while maintaining the stablecoin’s peg to the dollar.

The SEC’s decision to classify YLDs as “certificates” under securities regulations sets a new precedent, distinguishing them from the unregulated wild west of other crypto assets. This move could shake up the stablecoin market, offering a model that balances stability with profitability—a rare combo in the crypto space.

Speaking of crypto, the broader market is grappling with its own demons. Nearly a quarter of the top 200 cryptocurrencies have hit their lowest levels in over a year, with 24 per cent tumbling to 365-day lows after a sharp decline on February 7. Analysts are split on what this means.

Some, like Juan Pellicer from IntoTheBlock, see it as a temporary correction—a healthy shakeout after a period of exuberance. Others aren’t so sure, warning that this could signal a deeper capitulation, reminiscent of past bear markets. The debate over whether crypto is in a bull or bear cycle rages on, but one thing’s clear: sentiment is fragile, and these price drops are testing the resolve of even the most ardent believers.

So, what’s my take on all this? I see a world in flux, where optimism and caution are locked in a tug-of-war. Walmart’s warning is a red flag, no doubt—it’s hard to ignore when a company that touches millions of consumers signals trouble ahead. Pair that with rising jobless claims, and you’ve got a recipe for unease.

But I’m not ready to call it a full-blown crisis just yet. The labour market still has muscle, and the Fed’s steady hand—while frustrating for growth-hungry investors—shows a commitment to avoiding the inflationary spirals of the past. The pullback in Treasury yields and the yen’s strength suggest markets are finding a new equilibrium, not plunging into chaos.

The YLDs stablecoin experiment fascinates me—it’s a glimpse of how crypto might evolve beyond speculative mania into something more practical and regulated. As for the broader crypto downturn, I lean toward the correction camp. Markets need to breathe, and this could be a reset before the next leg up—or down.

Ultimately, we’re in a holding pattern, waiting for clearer signals on tariffs, inflation, and Fed policy. Until then, expect volatility, but don’t bet on a collapse just yet. The data’s too mixed, and the world’s too resilient, for that.

Source: https://e27.co/wall-streets-volatility-spills-into-crypto-tradfis-domino-effect-20250221/

Anndy Lian

www.anndy.com

j j j

February 20th, 2025

From treasuries to Bitcoin: The Fed’s ripple effect

Key points:

The January FOMC minutes revealed the Fed’s cautious stance on rate cuts, emphasizing a data-driven approach to disinflation while hinting at a potential pause in quantitative tightening (QT), signaling a delicate balance between inflation control and economic growth.
The Fed’s focus on the supplementary leverage ratio (SLR) suggests potential regulatory adjustments to ease bank balance sheet pressures, which could lower bond yields and support financial stability, marking a shift toward more targeted policy measures.
Market reactions were mixed: US equities saw late gains, led by healthcare stocks, while housing data showed weakness due to high borrowing costs, reflecting broader economic uncertainty and the Fed’s impact on financial conditions.
Global markets responded unevenly to the Fed’s signals, with European stocks faltering amid US tariff concerns and geopolitical tensions, while Asian indices trended lower, highlighting the Fed’s influence on global risk sentiment.
Traditional financial giants like State Street and Citi are entering the crypto custody space, signaling growing institutional acceptance of digital assets, which could stabilize volatile crypto markets and blur the lines between traditional and digital finance.

I’ve been closely following the developments that unfolded following the release of the January Federal Open Market Committee (FOMC) minutes. These minutes, released by the US Federal Reserve, provide a window into the central bank’s thinking and have sparked a nuanced reaction across markets.

My perspective on this topic is shaped by a blend of macroeconomic analysis, market observations, and a critical eye on how these developments ripple through various asset classes and geographies. The muted global risk sentiment that emerged in the wake of these minutes reflects a cautious recalibration by investors, balancing the Fed’s hawkish stance on inflation with emerging signals about potential shifts in monetary policy tools like quantitative tightening (QT) and the supplementary leverage ratio (SLR).

Let’s unpack this in detail.

The January FOMC minutes reiterated a stance that many market participants had anticipated but still found sobering: the Federal Reserve is in no rush to cut interest rates. With inflation proving stickier than hoped—hovering above the Fed’s two per cent target despite some progress—the central bank emphasised a data-dependent approach, signalling that rate cuts remain contingent on clearer evidence of disinflation.

This hawkish tone was tempered, however, by hints that the Fed might be nearing the end of its quantitative tightening program, a policy that has seen the central bank shrink its balance sheet by allowing bonds to mature without reinvestment.

The minutes’ suggestion of a potential pause or conclusion to QT caught the attention of analysts and traders alike, as it could imply a softening of the Fed’s aggressive stance on draining liquidity from the financial system. For me, this duality—caution on rates paired with a possible pivot on QT—highlights the Fed’s delicate balancing act: controlling inflation without choking economic growth.

One of the more intriguing aspects of the minutes was the Fed’s focus on the supplementary leverage ratio (SLR), a regulatory metric that dictates how much capital banks must hold against their total assets. The inclusion of an entire paragraph on the SLR suggests that the Fed sees relieving pressure on bank balance sheets as a priority. This is significant because the SLR has been a point of contention, particularly during periods of market stress when banks’ ability to absorb government debt or facilitate market liquidity can falter under tight capital constraints.

By signalling potential adjustments to the SLR, the Fed may be laying the groundwork to ease these pressures, which could lower bond yields and widen swap spreads at the longer end of the yield curve. Indeed, post-minutes, US swaps moved to session highs, and Treasuries saw buying interest, with the 10-year US Treasury yield dipping 2 basis points to 4.53 per cent. From my vantage point, this move underscores a subtle shift in the Fed’s toolkit—away from blunt rate hikes and toward more targeted measures to support financial stability.

The market’s reaction to these developments was telling. US equities managed to gain traction late in the trading session, with the MSCI US index edging up 0.2 per cent. Sector performance, however, revealed a mixed picture. Healthcare stocks led the charge with a 1.2 per cent advance, possibly buoyed by their defensive appeal amid economic uncertainty.

Meanwhile, the Materials sector lagged, dropping 1.4 per cent, a decline I attribute to persistent concerns over US tariff threats—an issue that continues to weigh on industries reliant on global supply chains. This late rally in equities suggests that while global risk sentiment remains subdued, investors are still willing to bet on pockets of resilience within the US economy, particularly as the Fed hints at measures to bolster financial conditions.

On the economic data front, the latest US housing starts figures painted a less rosy picture. A decline in both single- and multifamily home construction reflects growing unease over rising mortgage rates and a glut of unsold homes. For me, this is a critical signal. Housing is a bellwether for broader economic health, and its softening aligns with the Fed’s acknowledgment of an uncertain outlook. High borrowing costs, fuelled by the Fed’s current rate stance, are clearly taking a toll, and I suspect this data point will keep policymakers vigilant as they weigh the risks of overtightening.

Turning to currencies and commodities, the US Dollar Index ticked up 0.1 per cent, a modest gain that reflects its safe-haven status amid global caution. Gold, often a barometer of investor anxiety, slipped 0.1 per cent, a slight retreat that might suggest some profit-taking after recent highs.

Brent crude, however, climbed 0.3 per cent to US$76 per barrel, marking its second consecutive session of gains. This uptick, in my view, is less about bullish sentiment and more about supply-side fears—specifically, potential disruptions to US and Russian oil flows amid geopolitical tensions and tariff rhetoric. These movements underscore how interconnected global markets are, with each asset class responding to a complex web of Fed policy, economic data, and external risks.

Across the Atlantic, European stocks faltered, dragged down by the spectre of US tariffs and apprehension ahead of Germany’s upcoming election. The German vote, scheduled for Sunday, adds another layer of uncertainty, as its outcome could shape the Eurozone’s economic direction at a time when trade tensions are already fraying nerves.

In Asia, equity performance was uneven, with most indices trending lower in early trading. US equity futures, meanwhile, hinted at a softer open, suggesting that the cautious mood might persist into the next session. For me, this global patchwork of market responses illustrates how the Fed’s words reverberate far beyond US borders, influencing risk appetite from Frankfurt to Tokyo.

Shifting gears to the cryptocurrency space, a notable development caught my eye: State Street and Citi, two financial behemoths with over US$70 trillion in assets under custody, are gearing up to offer crypto custody services. State Street is reportedly eyeing a 2026 launch for Bitcoin and other digital assets, while Citi is exploring similar offerings, though without a firm timeline. This move marks a seismic shift in Wall Street’s embrace of cryptocurrencies, driven by surging institutional demand, clearer regulations, and the lure of new revenue streams.

As a journalist, I see this as a watershed moment. Traditional banks have long been wary of crypto’s volatility and regulatory grey areas, but the entry of heavyweights like State Street and Citi signals that digital assets are no longer a fringe phenomenon—they’re becoming a core part of institutional finance. For investors like hedge funds and asset managers, secure custody from trusted names could unlock significant capital inflows, potentially stabilising crypto markets long plagued by wild swings.

This shift comes amid other crypto headlines. Researchers reported a US$99 million withdrawal from the Milei-backed Libra token, a move that raises questions about confidence in certain digital projects. Meanwhile, Bitcoin rebounded to around US$96,000, and XRP surged six per cent, according to CNBC Crypto World.

These price movements suggest that while specific tokens may face turbulence, the broader crypto market retains resilience—perhaps buoyed by the prospect of institutional backing from firms like State Street and Citi. From my perspective, this juxtaposition of traditional finance’s entry and crypto’s ongoing evolution underscores a broader narrative: the lines between old and new money are blurring, and the Fed’s policy backdrop will play a pivotal role in shaping this convergence.

Reflecting on all this, I can’t help but marvel at the complexity of today’s financial landscape. The Fed’s January minutes, with their cautious tone on rates and nuanced hints at policy tweaks, have set the stage for a multifaceted market response. Lower Treasury yields and a late equity uptick offer glimmers of optimism, yet housing weakness and tariff fears temper that enthusiasm. Globally, Europe and Asia grapple with their own challenges, while the crypto world stands on the cusp of a mainstream breakthrough.

My take is that we’re at an inflection point—where central bank decisions, economic fundamentals, and technological shifts are colliding to redefine risk and opportunity. The Fed’s next moves, whether on rates, QT, or the SLR, will be critical, and I’ll be watching closely to see how this story unfolds. For now, the muted risk sentiment feels like the calm before a potentially transformative storm.

Source: https://e27.co/from-treasuries-to-bitcoin-the-feds-ripple-effect-20250220/